Felix Salmon and Kevin Drum discuss counterfeit luxury goods and their effect on sales of the real items. However they overlook one type of damage. Kevin Drum:
... There are also people who just flatly can't afford a real Gucci and never will. But in those cases Gucci isn't losing anything when they buy a fake. ...
But this is surely wrong. People buy luxury goods in part to show off, to flaunt their wealth. However this is ineffective if there are lots of indistinguishable cheap fakes in circulation. So Gucci is hurt by cheap fakes as they diminish the appeal of the real thing. Similarly luxury brands are wary of adding low end items to their product line. It cheapens the brand as the saying goes.
I can understand why people think enforcing laws against counterfeiting luxury goods should be low priority but luxury good makers are not crazy to want these laws enforced.